Post by anenro on Sept 17, 2019 14:40:08 GMT 4
Precious Metals: A Money Laundering Magnet
While covertly operating within the underworld as a money launderer, I had the occasion to deal with some of the most notorious money launderers in the world. I’ll never forget a particular steamy evening in Panama when I was having dinner with an old friend of Panamanian General Manuel Noriega. This Russian born Director of a Panamanian bank, who ran a conglomerate of global businesses that provided cover for his underworld escapades, was the target of decades of investigations that failed to get inside his criminal enterprise. When he learned through the mafia grapevine that I was then laundering for the leaders of Colombia’s Cali Cartel, we got lucky. He dropped his guard and offered me his resources in hopes of forming a partnership in crime.
As the butter splashed across the plastic bib covering his protruding belly, he cracked the lobster tail hanging over the sides of his plate and casually offered me some advice. “I have contacts that are taking advantage of a wonderful method that has cleaned many millions.”
As he explained it, a Swiss bank he named was at the heart of a money-laundering machine that had been safely operating for years. The bank arranged the periodic private jet delivery of millions worth of gold bars to a remote airstrip in Colombia. As the aircraft slowly taxied past a line of jeeps, each with teams of traffickers sporting AK-47s to protect the many duffel bags of cash stuffed in each 4 x 4, the doors of the private jet opened. A synchronized exchange was carried out – bars of gold to the traffickers in exchange for the bank’s receipt of a mountain of US currency. The gold bars were sold to the traffickers at 15% below market, a typical laundering fee paid by cartel leaders. After the exchange, the jet flew off to several haven countries in the Americas where the cash was quietly deposited and later transferred to Switzerland. Meanwhile, the traffickers melted down the gold bars and, through front companies, took the gold to Colombia’s Central Bank. The gold was registered as having been locally mined. In exchange for the gold, the Central Bank paid out Colombian pesos – money laundering mission accomplished.
Some might suggest that this bank Director may have been puffing, except for the fact that I was separately informed of all these details by other sources, including an officer of the Swiss bank in question who also thought I was a key launderer for Colombian cartels.
There are many factors beyond smuggled gold imports that contribute to unusual statistics related to gold transactions in Colombia and several other countries. In some years, the annual production of gold by Colombian mining operations has been 4 to 5 times less than the amount of gold exported from that same country during the same year. These numbers are impacted to some degree by illegal gold mining, but another factor complicates reality when sellers of precious metals in Colombia use a different industry laundering scheme that involves their intentionally inflating the value of gold exported to buyers outside of Colombia, often to Miami and Switzerland.
Inflating gold exports by falsifying foreign sales or inflating sales to foreign buyers creates valuable false documentation for Colombian based launderers that want a legitimate appearing cover to move narco-dollars from the US and Europe back to Colombia. Since their documentation falsely asserts large sales abroad, launderers can arrange wire transfers of narco-dollars from the US and Europe disguised as legitimate payments for precious metals. There are countless money laundering cases involving this technique that has been brought against precious metal dealers. One that deserves your review is the case against GOLDEX brought by Colombian authorities in 2015. The GOLDEX scandal has striking similarities to the facts of a similar money-laundering operation in which I participated when I worked undercover within the Medellin Cartel in the late 1980s. That prior prosecution by U.S. authorities was dubbed OPERATION POLAR CAP. Internet searches relative to both of these scandals spell out the mechanics.
I was moved to write this article because of a new development that publicly broke yesterday in Grand Cayman concerning a matter that carries many of the earmarks of the issues I’ve outlined above. Precious metals businesses have carried very high money laundering risk for decades, and they will for decades to come. This article doesn’t attempt to address all methods of laundering through precious metals transactions. When I get the opportunity to conduct master classes, among many other schemes, we drill down on what I consider to be the 5 principal methods of laundering through precious metals transactions. My hope in this article is to simply highlight significant money laundering risk within this industry.
Below is a link that offers details about the latest example. This developing gold-related scandal and this industry, in general, are well deserving of enhanced due diligence:
www.caymancompass.com/2019/09/10/fifth-man-charged-in-money-laundering-case/
While covertly operating within the underworld as a money launderer, I had the occasion to deal with some of the most notorious money launderers in the world. I’ll never forget a particular steamy evening in Panama when I was having dinner with an old friend of Panamanian General Manuel Noriega. This Russian born Director of a Panamanian bank, who ran a conglomerate of global businesses that provided cover for his underworld escapades, was the target of decades of investigations that failed to get inside his criminal enterprise. When he learned through the mafia grapevine that I was then laundering for the leaders of Colombia’s Cali Cartel, we got lucky. He dropped his guard and offered me his resources in hopes of forming a partnership in crime.
As the butter splashed across the plastic bib covering his protruding belly, he cracked the lobster tail hanging over the sides of his plate and casually offered me some advice. “I have contacts that are taking advantage of a wonderful method that has cleaned many millions.”
As he explained it, a Swiss bank he named was at the heart of a money-laundering machine that had been safely operating for years. The bank arranged the periodic private jet delivery of millions worth of gold bars to a remote airstrip in Colombia. As the aircraft slowly taxied past a line of jeeps, each with teams of traffickers sporting AK-47s to protect the many duffel bags of cash stuffed in each 4 x 4, the doors of the private jet opened. A synchronized exchange was carried out – bars of gold to the traffickers in exchange for the bank’s receipt of a mountain of US currency. The gold bars were sold to the traffickers at 15% below market, a typical laundering fee paid by cartel leaders. After the exchange, the jet flew off to several haven countries in the Americas where the cash was quietly deposited and later transferred to Switzerland. Meanwhile, the traffickers melted down the gold bars and, through front companies, took the gold to Colombia’s Central Bank. The gold was registered as having been locally mined. In exchange for the gold, the Central Bank paid out Colombian pesos – money laundering mission accomplished.
Some might suggest that this bank Director may have been puffing, except for the fact that I was separately informed of all these details by other sources, including an officer of the Swiss bank in question who also thought I was a key launderer for Colombian cartels.
There are many factors beyond smuggled gold imports that contribute to unusual statistics related to gold transactions in Colombia and several other countries. In some years, the annual production of gold by Colombian mining operations has been 4 to 5 times less than the amount of gold exported from that same country during the same year. These numbers are impacted to some degree by illegal gold mining, but another factor complicates reality when sellers of precious metals in Colombia use a different industry laundering scheme that involves their intentionally inflating the value of gold exported to buyers outside of Colombia, often to Miami and Switzerland.
Inflating gold exports by falsifying foreign sales or inflating sales to foreign buyers creates valuable false documentation for Colombian based launderers that want a legitimate appearing cover to move narco-dollars from the US and Europe back to Colombia. Since their documentation falsely asserts large sales abroad, launderers can arrange wire transfers of narco-dollars from the US and Europe disguised as legitimate payments for precious metals. There are countless money laundering cases involving this technique that has been brought against precious metal dealers. One that deserves your review is the case against GOLDEX brought by Colombian authorities in 2015. The GOLDEX scandal has striking similarities to the facts of a similar money-laundering operation in which I participated when I worked undercover within the Medellin Cartel in the late 1980s. That prior prosecution by U.S. authorities was dubbed OPERATION POLAR CAP. Internet searches relative to both of these scandals spell out the mechanics.
I was moved to write this article because of a new development that publicly broke yesterday in Grand Cayman concerning a matter that carries many of the earmarks of the issues I’ve outlined above. Precious metals businesses have carried very high money laundering risk for decades, and they will for decades to come. This article doesn’t attempt to address all methods of laundering through precious metals transactions. When I get the opportunity to conduct master classes, among many other schemes, we drill down on what I consider to be the 5 principal methods of laundering through precious metals transactions. My hope in this article is to simply highlight significant money laundering risk within this industry.
Below is a link that offers details about the latest example. This developing gold-related scandal and this industry, in general, are well deserving of enhanced due diligence:
www.caymancompass.com/2019/09/10/fifth-man-charged-in-money-laundering-case/